Four key considerations for a successful payment factory initiative

By Ed Adshead-Grant | 15 February 2017

Managing global enterprise payments is more complex and demanding than ever before. Credit is tight, the macroeconomic environment is fast-changing and the typical backbook of mergers and acquisitions have led to a host of complexities. Multiple divisions and business sites within organisations combine with legacy back-office systems and processes and multiple banking relationships, to make global cash management difficult.

To manage these challenges successfully, organisations must find a way to eliminate inefficiencies in payment processing and cash management. But how?

Two simple words: Payment factory

The benefits of payment factories are powerful, which explains why they’re being increasingly employed by organisations looking to drive efficiency.

Payment factories bring order to complex, transaction-based, siloed systems historically dedicated to specific payment types. They make it possible to increase efficiency and gain visibility into cash position by streamlining and standardising the payments process across all enterprise applications, payment types and banks. They also support global payment and remittance standards, consolidate inquiry, reporting and control capabilities, plus manage the complete payments lifecycle.

The benefits for large organisations go even further, where payment factories can provide real-time global access to transactional information and account balances by consolidating payments and cash management positions into a single view. They can also interface with back-office AP and AR systems to integrate inbound and outgoing funds on a daily basis.

This centralisation of information makes it possible to view and control balances on all accounts across multiple banks, forecast cash flow needs on a short-term basis and ensure liquidity for upcoming disbursements, plus better manage liquidity by turning data into actionable intelligence.

Implementing a payments factory should be approached thoughtfully, however with a close eye on the final scope and definition. While they offer impressive benefits, there is a right and a wrong way to go about it. Here are four considerations to ensure a successful payment factory initiative:

1. Secure controls and standardised processes

While there are a number of regulations in place to ensure proper internal controls, the systems most organisations have in place are heavily reliant on an “honour system” of people following those rules. The result is a payment system that has become too easily accessible, where bad habits regarding rules have crept in.

An efficient payment factory must provide a platform for strengthening control and visibility of banking, payment, and treasury activities, such as a flexible approval workflow with configurable entitlements for definable user groups, based on multiple approval levels by payment type, templates and transaction limits.

2. Streamlined global payments

It is common practice in international cash management to minimise the use of cross-border payments (wherever practical) in favour of lower cost, more reliable domestic payments. With this tried and tested in-country banking approach, it’s critical to take into account any local differences in markets where the organisation has a significant flow of payments and collections. For example, UK payment schemes allow Direct Corporate Access to Bacs and the Faster Payments Service. This is different to other countries, where corporate payment files are submitted to the local Automated Clearing House (or ACH) via their payment banks. It is important to find a solution which incorporates these local requirements in order to benefit from maximum flexibility and lowest cost routing.

3. Robust multi-bank connectivity

In an age where most organisations have multiple banking relationships and use a wide-range of e-banking systems, it’s no surprise that secure, multi-bank connectivity is at the core of most payment factory initiatives. An increasing number of corporates and non-bank Financial Institutions (FIs) utilise SWIFT to make those connections, with most connecting via a secure service bureau for reasons of ease and practicality. For organisations choosing to follow that path, it makes sense to select a technology partner that not only offers cloud-based payment solutions but is also a SWIFT service bureau. Experience cannot be understated in this instance. Connecting with a wide range of banks internationally is complex, risky and carries a burden of ongoing compliance - choosing a vendor with a proven record is key.

4. Preventing fraud and financial crime

There is more focus than ever on fighting payment fraud. While most of the onus is on financial institutions, corporates must also shoulder some of the responsibility in keeping payments secure. When implementing a payment factory, it’s important to make sure the solution offers an integrated sanction screening capability. Additional screening solutions that can identify markers of internal fraud, with real time alerting and investigation centres to track the case have also become a common requirement.

Inefficiencies in payment processing and cash management can make or break a business. There are many ways organisations can streamline processes to give their business a competitive edge. Payment factories, when implemented thoughtfully and with an eye towards best practices, are an option well worth considering in every annual review.

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Ed Adshead-Grant

General Manager, Payments & Cash Management, Bottomline

With over 20 years’ experience in the payments sector, Ed is responsible for driving the strategic development and execution of the payments business segment for the EMEA line of business. Having worked at leading IT software and service companies for projects in over 30 countries, Ed has held a number of global strategy, product and client management roles with PwC, First Data Corporation, Pepper Consultants and Hewlett-Packard. Ed is passionate about helping financial institutions and corporates to better power and protect their payments and financial messaging.

Ed Adshead-Grant

General Manager, Payments & Cash Management, Bottomline

With over 20 years’ experience in the payments sector, Ed is responsible for driving the strategic development and execution of the payments business segment for the EMEA line of business. Having worked at leading IT software and service companies for projects in over 30 countries, Ed has held a number of global strategy, product and client management roles with PwC, First Data Corporation, Pepper Consultants and Hewlett-Packard. Ed is passionate about helping financial institutions and corporates to better power and protect their payments and financial messaging.

Insight delivered daily to your inbox

Ed Adshead-Grant

General Manager, Payments & Cash Management, Bottomline

With over 20 years’ experience in the payments sector, Ed is responsible for driving the strategic development and execution of the payments business segment for the EMEA line of business. Having worked at leading IT software and service companies for projects in over 30 countries, Ed has held a number of global strategy, product and client management roles with PwC, First Data Corporation, Pepper Consultants and Hewlett-Packard. Ed is passionate about helping financial institutions and corporates to better power and protect their payments and financial messaging.

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